Policy and Medicine Compliance Update July 2023 Issue Features: HHS OIG Guidance on Cash Equivalents, Gift Cards and In-kind, Supreme Court Polansky Decision, Rite Aid Arguments, and PBM Legislation
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We begin this month by reviewing the U.S. Supreme Court’s long-awaited Polansky decision. The Court’s 8-1 decision clarifies when the government can intervene in a False Claims Act (“FCA”) whistleblower case and the standard of review. However, the dissent is noteworthy because it casts doubt on the constitutionality of using whistleblowers as an enforcement tool.
Next, we return to the topic of opioids. Until recently, the cases have rehashed old issues and theories of liability. However, this case involving Rite Aid Corporation uses the FCA to address alleged Controlled Substance Act violations. It is a novel theory that, if successful, has potential implications for all life sciences.
In March 2023, the HHS-OIG published new fraud and abuse FAQs and an Advisory Opinion, which covered, among other things, cash equivalents, gift cards, and in-kind items in the context of the AKS and the Beneficiary Inducement CMP. Even for compliance professionals, it is a confusing area that frequently generates compliance questions. Therefore, we decided it was essential to cover it.
Finally, we close out this issue by examining recent regulatory and legislative efforts targeting PBM business practices. Following the passage of the Inflation Reduction Act, efforts are underway to reform the PBM industry, which undoubtedly will impact prescription drug manufacturers.
Setting Boundaries
U.S. Supreme Court Partially Addresses Government Dismissals in FCA Whistleblower Cases
By Dr. Seth B. Whitelaw, Editor
The Supreme Court’s recent decision in Polansky answers the question of whether the government must intervene to dismiss a whistleblower FCA case after the initial seal period ends. However, it did not definitively resolve the issue of the appropriate standard of review for such motions. Moreover, three justices signaled their belief that the FCA whistleblower provisions may be unconstitutional.
Litigation & Enforcement
Rite Aid Contends Hindsight & Hyperbole Cannot Support the DOJ’s Case
By Robert N. Wilkey, Esq., Senior Staff Writer
The ongoing prescription opioid litigation has resulted in billions of dollars in settlements involving manufacturers, distributors, pharmacies, and physicians. However, the Justice Department continues its efforts to hold those it deems responsible accountable. In the latest twist, the DOJ is suing Rite Aid, alleging that the company’s-controlled substances violations resulted in false claims. Unsurprisingly, Rite Aid is challenging the government’s case arguing, in essence, that it is built on hyperbole and limited facts. Beyond the context of prescription opioids, this case presents important reminders for life science compliance professionals.
Regulatory Update
HHS-OIG Guidance on Cash Equivalents, Gift Cards & In-Kind Items
By Kirt Kraeuter, Staff Writer
Recent FAQs and an Advisory Opinion published by the HHS-OIG clarified the government’s position on the preventive care exception to the Beneficiary Inducement CMP. They also clarified how the AKS and Beneficiary Inducement CMP interact regarding cash equivalents, gift cards, and in-kind items. Nevertheless, they are not a panacea and leave significant issues unaddressed, particularly in the appropriate treatment of gift cards.
Legislative Update
Pharmacy Benefit Managers & Drug Pricing
Congress Puts PBMs Under the Microscope
By Gwendolyn A. Ball, Staff Writer
Fresh from their success at introducing real, though limited, drug pricing reforms directed at manufacturers, the Biden Administration and Congress have now focused on reforming PBM business practices. While substantive reform is unlikely in the near term, the level of bipartisanship exhibited is an encouraging sign that the journey may not take as long as the drug pricing provisions of the Inflation Reduction Act.
From all of us here at Policy & Medicine Compliance Update, we hope all our readers utilize our resources to become better compliance professionals. We encourage you to subscribe and for your continuing support making us the most comprehensive, up-to-date compliance publication for life science compliance professionals.